Suntra ordered to pay KCB in Safaricom refund claim
What you need to know:
KCB had applied for the Safaricom shares through Suntra Investment Bank on behalf of its Ugandan customer.
Suntra had appointed KCB as an agent to promote and facilitate participation of its customers in the Safaricom IPO at an agreed commission.
High Court judge Jacqueline Kamau directed Suntra to refund KCB the amount after the broker admitted the claim.
The High Court has ordered a stockbrokerage firm to repay KCB Sh24.7 million that the bank spent to refund a customer who missed out on the Safaricom share sale.
KCB had applied for the Safaricom shares through Suntra Investment Bank on behalf of its Ugandan customer, but the refund arose following a huge over-subscription of the Safaricom Initial Public Offering (IPO) in 2008.
Suntra had appointed KCB as an agent to promote and facilitate participation of its customers in the Safaricom IPO at an agreed commission.
High Court judge Jacqueline Kamau directed Suntra to refund KCB the amount after the broker admitted the claim.
The judge dismissed objections by Suntra and directed it to pay the cash even as the rest of the claim in the application by KCB goes to full trial.
“The amount admitted was Sh24,772,230 and it is only this sum that this court can enter judgment for,” ruled Justice Kamau.
KCB moved to court in 2011 seeking a refund of Sh50 million from Suntra, which it alleged comprised the amount paid on behalf of the customer in 2008, the interest accrued and the commission due to the bank from the stockbrokerage firm.
The bank in its application sought a court order compelling Suntra to pay it Sh10 million as commission for facilitating the sale of shares worth Sh993 million.
The bank said that on April 23, 2008, one of its customers Sudhir Ruparelia, through KCB Uganda, applied for 23.4 million Safaricom shares worth Sh117 million at the IPO price of Sh5 per share and the stockbroker received the payment.
Due to over subscription, Suntra refunded Ruparelia Sh92 million but retained Sh24.7 million.
KCB says Suntra did not allot shares for the retained amount nor did it refund the money.
KCB thus instructed its Ugandan branch to pay the client $585,199, including interest for the 83 days he incurred on his loan and bank charges on the transaction.
Ruparelia executed a formal assignment of his rights to KCB and authorised the bank to seek refund from the stockbroker.
Suntra opposed the claim arguing that it is not party to the contract between the bank and its customer in Uganda.
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